May 2016 saw year-on-year growth in the average nominal value of middle-segment homes in the South African residential property market slowing down to 5,7% from 6,1% in April. Year-to-date price growth up to May came to about 6% year-on-year. In real terms, i.e. after adjustment for the effect of consumer price inflation, house price growth remained around the zero level up to April. Real price trends are important from a property investment perspective, as investors would want to determine if their investment is beating inflation.
In view of economic and household sector trends and prospects, house price growth is expected to slow down further from current levels towards the end of the year. Nominal price growth is forecast at around 5% for the full year, with some real price deflation of about 2% expected on the back of a projected consumer price inflation rate of almost 7% this year.
Read more here: Absa HPI May 2016